History Repeats Itself

George Gilder’s Friday Letter had a very interesting piece in it today. Gilder’s thoughts on the continuing negativity of certain people parallels what I am witnessing. We are in the midst of an incredible technological revolution in this country that is going to lift incomes, wealth and prospects. However, the mainstream media prefers to report on anything negative, as opposed to having a vision of where we are going.

Here is what Gilder has to say:

George Gilder (11/30/05): Twenty years ago, Clyde Prestowitz was one of my leading debating partners, along with Lester Thurow and Robert Reich. All of them were citing the same "imbalances" (tech trade gaps, near zero savings, foreign purchases of U.S. assets) and making exactly the same arguments for catastrophe that Prestowitz offers in Newsweek. The only difference was that in the 1980s they fervently agreed that the country that would vastly outperform the U.S. was Japan. They were also sure that Europe would excel us.

Instead, since the early 1980s the U.S. has risen from around 25% of global GDP to close to 30% and from a third of global market cap to nearly half (depending on purchasing power parity or currency values). The fact is that capital movements, flowing through fiber at the speed of light, now dictate trade flows rather than the other way around. The converse of a capital surplus, the trade gap signifies the superiority of U.S. financial markets and entrepreneurial opportunities. I believe that the U.S. economy has many weaknesses (litigation, green paranoia, special interest politics driven by McCain-Feingold, fatuous mushy education), and that China could become a more potent challenger than Japan was. But Prestowitz still doesn't have a clue.